Fit and Proper: Are you complying with GPS 520?

In Australia’s insurance and finance sectors, good governance isn’t optional — it’s fundamental. One of the key frameworks underpinning this responsibility is Prudential Standard GPS 520 Fit and Proper, a standard issued by the Australian Prudential Regulation Authority (APRA).

GPS 520 requires that individuals holding positions of responsibility in an insurance company or related financial institution be assessed as “fit and proper.” But what does that actually mean — and how do you make sure your organisation is compliant?

Who is a “Responsible person”?

Under GPS 520, a responsible person is anyone with key management influence in an insurer or financial organisation. This includes:

• Directors
• Senior managers
• Appointed auditors
• Actuaries or risk managers
• Any other person APRA deems to have a material impact on governance or operations

It’s up to the organisation to determine whether each responsible person meets the “fit and proper” criteria. The assessment goes beyond qualifications — it looks at qualities such as competence, diligence, honesty, integrity, and judgement. If you’re not sure who the responsible persons are in your organisation, APRA’s Fit and Proper Guidance explains this clearly.

Why fit and proper compliance matters

At a minimum, your policy should:

• Outline the criteria used to assess responsible persons
• Set out the process for conducting checks and assessments
• Include whistleblower protections to ensure staff can report concerns without fear of retaliation
• Define the process for dealing with adverse findings

Encouraging employees to raise integrity or conduct concerns promotes transparency and accountability. For reference, see ASIC’s Whistleblower Protections.

The Broader Context: “Fit and Proper” beyond insurance and finance

The idea of a “fit and proper person” isn’t unique to the insurance or finance industries — it’s a cornerstone of integrity across many regulated professions.

Sectors that apply similar standards include:

• Aviation (for pilots and air traffic controllers)
• Education (for teachers and childcare workers)
• Healthcare (for doctors and nurses)
• Transport and security industries
• Financial services and credit licensing

Typically, assessments focus on three broad elements:

1. Honesty and integrity — including criminal history or misconduct checks
2. Competence and capability — assessing knowledge, skills, and experience
3. Financial soundness — ensuring individuals are not bankrupt or disqualified from holding directorships

For more examples, see the Australian Government’s Fit and Proper Person Requirements.

HR and Governance responsibilities

In most insurance and finance organisations, the Human Resources Manager or a designated compliance officer oversees the Fit and Proper process. This includes collecting and maintaining documentation such as:

• National police check
• Bankruptcy check
• Disqualified persons register check
• Fit and Proper declaration
• Directors’ eligibility declaration

Each record should include basic details (name, date of birth, position, assessment outcome) and evidence that the person was reviewed under GPS 520 criteria. Having an auditable trail isn’t just good practice — it’s what APRA expects when conducting a prudential review.

Building a culture of compliance in finance and insurance

Complying with GPS 520 isn’t a “once-a-year” exercise. It should be embedded into your organisation’s governance culture. Regular training and refreshers help keep compliance front of mind. A good Fit and Proper framework isn’t only about avoiding penalties — it’s about ensuring that the people steering your financial or insurance organisation are worthy of the trust placed in them.

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